The Dysfunctional Giant

The econbloggers mutter darkly about the growing power of China. Reading the long and paranoia-filled comment boards, it's easy to be convinced that the leaders of China are diabolical geniuses leading the U.S. down the primrose path of easy money as part of a master plan to world economic domination. One can picture them, long-haired white cat in hand, plotting our demise with the inexorable logic of a world-class Go master.

Then you look at actual news in China, and you realize that their leadership is, to borrow a phrase from Brad DeLong, nothing more than a clown show. Inciting riots against your neightbor and one of your largest trading partners is hardly the behavior of an economic mastermind. To quote the Peking Duck, China is bickering with Japan "like kids in a sandbox." As I've already addressed my distastes for Japan's failings in this matter at length, let me also note the jaw-dropping irony that the People's Republic of China is criticizing another country for inaccurate history textbook! Even while their demanding justice for a 60 year old injustice, they're busy persecuting Uigurs in their own backyard.

Of course, just because they're a bunch of jokers doesn't make them any less dangerous. The Chinese government is probably not buying more and more U.S. bonds so that they can bankrupt us, but because they need to keep their growth strong (stability above all) and that means propping up the dollar so we can keep spending. It's a bad, co-dependent relationship that will probably end in tears. But I won't be surprised if the U.S. ends up bruised while China ends up crushed.

Frankly, I'm more worried as a Taiwanese than as an American.